2020
Kurimoto, Manufacturing the Future

ANNUAL REPORT
Year ended March 31, 2020

KURIMOTO, LTD.
In 1909 Kurimoto, Ltd. began operations as manufacturer of cast ironpipes for water and gas mains. With determination and foresight, thecompany soon began to diversify into other fields, serving the industrial
sector in a multitude of ways.
The major divisions of Kurimoto now provide ductile iron pipes, plant
equipment and engineering services, valves, and construction materials.
Involvement with and commitment to large-scale projects has enabled
Kurimoto to expand its areas of expertise, be it in land development,
industrial modernization, or urban renewal and construction. 12 factories
located throughout Japan comprise the company’s industrial base which,
together with 22 subsidiary companies, make up the Kurimoto group
employing about 2,100 people. Today, Kurimoto plays a vital role insupplying basic industrial products, machines, and services domesticallyand abroad.

Contents
Financial Highlights
Message from the President
Business Operations

1
2
3

Financial Section

4

Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows

Notes to Financial Statements
Independent Auditor’s Report
Corporate Information

9
17
20

Financial Highlights

Millions of yen (thousands of U.S. dollars) except per 100 share information
Years ended March 31

2020

2019

2018

2017

2016

2020

Net sales¥ 109,904¥ 108,786¥ 107,122¥ 101,647¥ 101,964$ 1,009,873

2,773

2,075

2,400

4,103

2,194

25,487

Profit (loss) attributable to owners of parent

22,283

16,565

19,16732,605

16,981

205

Cash dividends

6,000

6,000

6,000

5,000

4,000

55

Total assets

134,216

136,469

135,122

129,212124,382

1,233,264

Total shareholders’ equity(including Accumulated other comprehensive income)¥ 57,892¥ 58,070¥ 58,351¥ 55,599¥ 48,255$ 531,951

Profit (loss) attributable to owners of parent
Per 100 shares of common stock

Notes 1: The U.S. dollar amounts are calculated at the exchange rate of ¥108.83 to $1, the rate prevailing on March 31, 2020.
Notes 2: We have been carrying out consolidation of shares at a rate of one share per 10 shares of common stock since October 1, 2016, and have also revised the figures before 2016 for net
income per 100 shares and dividend per 100 shares.
Notes 3: Along with the change in the unit of investment from 1,000 to 100 shares on October 1, 2016, net income and dividend, which used to be indicated per 1,000 shares, have beenchanged to be indicated per 100 shares.

160,000

Net Sales (¥ million)

140,000
120,000
100,000

101,964

101,647’16’17

107,122

108,786

109,904

’18

’19

’20

80,0000Profit (loss) attributable to owners of parent (¥ million)
5,000

4,103

4,000
3,000

2,400

2,194

2,000

2,075

2,773

1,000
0

400

’16

’17

’18

’19

Net Income per Share of Common Stock (¥)
326.05

300
200

’20

191.67169.81165.65222.83100
060,000’16’17

Shareholder’s Equity (¥ million)

58,000

’18

’19

’20

58,351

58,07057,892

’18

’19

’20

55,59956,00054,00052,00050,00048,25548,00046,00044,000
0

’16

’17

1

Message from the President“We will overcome boundaries
between segments to generate value innew domains for a promising future.”Thank you for your ongoing supportof Kurimoto’s business activities.
Kurimoto was founded in February1909 to manufacture cast-iron pipe forwater supply based on our iron foundryexpertise. For over 100 years now wehave been committed to bringing people
a higher quality of living by improvingsocial infrastructure, lifeline systems,
and industrial machinery. Thanks go out
to every one of the group’s stakeholders
for your ongoing support.
Looking at the business climate
today, I would have to say that things are
becoming increasingly turbulent.
Internationally, the trade war between
the U.S. and China does not look like itwill end any time soon, and there is a
palpable fear that a no-deal Brexit fromthe EU might happen in the UK. I see
continuing uncertainty on so many
fronts. Within Japan, amidst
preparations for the Tokyo Olympics,
the spread of COVID-19 has nearlyparalyzed global economic activity. It istruly an unprecedented situation.
Under these circumstances, in the
middle year of our current three-year
mid-term business plan, consolidated
results exceeded initial forecasts forfiscal 2019 in both sales and profits, withan increase in revenues and profits fromthe previous year. Nevertheless,conditions remain quite tough in somesegments in terms of the market
environment and business structure, andwe must stay as vigilant as ever.
In our three-year business plan, we
identify some things that must be
maintained and others that must bechanged. The trust of our customers,

built up for over a century by ourpredecessors, must naturally bemaintained, and to do so, we must
generate the resolve to take action andmake those changes that are imperative.
One area that requires change is in
the boundaries between our businesses.
Every segment and business in our groupis a separate domain, and we have settled
into complacency over time with theseboundaries. I regret that we have put off
efforts to change this system. Of course
we need to maintain strength in our
existing business domains, but in someareas I believe that the only way tomaintain the trust of our customers is tobreak down barriers and reach acrossexisting boundaries.

overcome the present difficulties by
coming together as employees of thegroup to move in a unified direction.
Kurimoto celebrated its 110th
anniversary in February 2019. The factthat we have been able to run ourbusiness successfully for such a long timeis due in no small part to the guidanceand encouragement of our stakeholders.
I am extremely grateful and hope you
will continue to lend us your warm
support.

Again, the only way to be able toreach across our businesses is throughthe will of our employees—with the helpof every single person in the group. We
need to hold the shared vision thatchange is something to make happen,
not something to fear.
The 2020 fiscal year began without
any end in sight to the spread of
COVID-19. This may be the first time
for Japan to be fighting a pandemic in
earnest. To get the virus under control,
not only in Japan, but everywherearound the world, the hard decision is
being made to stop the movement ofpeople and goods, a policy measure thatis having an adverse effect on businessactivity. Yet, our business is one that
supports the social and economic
infrastructure, so even in times ofbusiness slowdown such as we areexperiencing today, we must continue tosupply the best possible systems to ourstakeholders.
There is no doubt that the KurimotoGroup will be tested especially this year,
but I am confident that we can

2Moriyoshi Kushida
President

June 2020

Moriyoshi Kushida
President

Business Operations

Corporate group sales by business area (in millions of yen)

Machinery system business22.4 %
124th
accounting period
109,904

Pipe system business49.5 %

Industrial materials business28.1 %

Pipe system businessIndustrial materials business

Sales of the pipe system business were 54,376 million yen, a decrease of
1,851 million yen over the previous consolidated fiscal year. Decreased
shipment by the Ductile Iron Pipe Division was the primary factor of thedecline in sales.
Despite the sales decrease, operating income of this business rose to2,338 million yen, an increase of 1,447 million yen over the previous
consolidated fiscal year, mainly because we made improvements of various costs
and raw material prices remained below our expectations. In addition, pricerevision implemented by the Ductile Iron Pipe Division and others also
contributed to the growth.

Sales of the industrial materials business were 30,879 million yen, an increase of
4,243 million yen over the previous consolidated fiscal year, supported by steadyshipment in the Plastic Products Division, as well as increased shipment of air
conditioning, soundproofing and other products in the Construction Materials
Division.
Operating income of this business came to 1,272 million yen, an increase of
533 million yen over the previous consolidated fiscal year. Sales growth in theConstruction Materials Division and the Plastic Products Division contributed
to the increase of operating income the most, as well as the improvements ofvarious costs.

Machinery system business
The machinery system business saw a decrease in sales due to decreased sales ofpresses in the Plant Engineering and Machinery Division, decreased shipmentby the Materials and Machinery Division and other factors. As a result, sales ofthis business fell to 24,647 million yen, a decrease of 1,274 million yen
compared to the previous consolidated fiscal year.
Operating income also fell to 1,020 million yen, a decrease of 578 million yen
over the previous consolidated fiscal year, due primarily to the decline in sales
registered by the Plant Engineering and Machinery Division and the Materials
and Machinery Division.

3

Financial Section

Consolidated Balance Sheets
March 31, 2020 and 2019

Thousandsof U.S. dollars(Note 2)Millions of yen

Assets

2019

2020

2020

Current assets¥ 20,388¥ 21,564$ 187,343

41,19346,316

378,509

35

28

329

Merchandise and finished goods

10,445

9,346

95,979Work in process

8,868

6,682

81,486

Raw materials and supplies

2,605

2,625

23,937

Prepaid expenses and other current assets

1,285

1,347

11,807

(152)

(137)

(1,396)

84,66987,774

777,998

Buildings and structures

26,85926,145

246,803

Machinery, equipment and vehicles

55,20553,910507,262

Tools, furniture and fixtures

10,1499,896

93,259Land

13,787

13,773

126,685

Cash and deposits
Notes and accounts receivable-trade
Notes and accounts receivable-trade— unconsolidated subsidiaries and affiliates

Allowance for doubtful accounts
Total current assets

Property, plant and equipment

400

391

3,679

Construction in progress

1,806

1,151

16,600

Accumulated depreciation(75,341)(74,146)(692,285)

Total property, plant and equipment

32,867

31,121

302,005

8,250

10,17275,812—— unconsolidated subsidiaries and affiliates

172

156

1,586

Long-term loans —— other

13

13

122

Lease assets

Investments and other assets
Investment securities —— other
Investment securities

Long-term loans—— unconsolidated subsidiaries and affiliates
Other investments
Allowance for doubtful accounts
Deferred tax assets (Note 8)Long-term prepaid expenses and otherTotal investments and other assets
Total assets

4

20

31

191

1,445

1,657

13,279

(164)

(178)

(1,513)

5,526

4,923

50,7801,414

798

13,001

16,67917,573

153,260¥ 134,216¥ 136,469$ 1,233,264

Financial Section

Thousandsof U.S. dollars(Note 2)Millions of yen

Liabilities and Shareholders’ Equity
Current liabilities
Notes and accounts payable-trade
Notes and accounts payable-trade—— unconsolidated subsidiaries and affiliates
Short-term loans payable (Note 3)
Current portion of long-term debt (Note 3)
Lease obligations
Income taxes payable
Accrued liabilities
Advances received
Employees’ savings deposits
Other current liabilities
Total current liabilities
Long-term liabilities
Net defined benefit liability (Note 4)Long-term debt (Note 3)
Lease obligations
Provision for environmental measures
Asset retirement obligations
Other long-term liabilities
Total long-term liabilities
Total liabilities

Net assets
Shareholders’ equity
Capital stock
Authorized:
Issued:

2020

2019

2020

¥ 28,806¥ 32,886$ 264,694

63
20,670
2,375
31
1,258
3,892
3,351
390
2,484
63,32531
20,255
2,111
28
510
3,479
2,377
399
2,248
64,328585
189,929
21,826292
11,56635,76630,797
3,588
22,828581,876

10,494
705
72
20
318
401
12,01375,339

9,482
2,881
31
110
318
449
13,27477,60296,434
6,486
668
188
2,927
3,685
110,390692,266

31,186

31,186

286,557

6,873
22,587(1,831)

6,880
21,178(1,750)63,160207,546(16,824)

58,81657,493

540,439771(4)(1,690)2,013
5(1,442)

7,086(42)(15,532)

(923)

576

(8,488)39,376,600 shares
13,398,490 shares in 201913,098,490 shares in 2020

Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these financial statements.

5

984

797

9,046

58,87658,867

540,998¥ 134,216¥ 136,469$ 1,233,264

Financial Section

Consolidated Statements of Income
Years ended March 31, 2020 and 2019

Thousandsof U.S. dollars(Note 2)Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income and (expenses)
Interest and dividend income
Interest expense
Gain on sales of investment securities
Restructuring loss
Insurance income
Loss on valuation of investment securities
Loss on valuation of inventories
Loss on disaster
Others, net
Income before income taxes
Income taxes (Note 8)
Current
Deferred
Total
ProfitProfit (loss) attributable to non-controlling interests
Profit attributable to owners of parent

2020

2019

¥ 109,904
83,786
26,117
21,7774,340¥ 108,786
84,147
24,63921,636
3,003$ 1,009,873
769,884
239,988
200,106
39,882

329
(143)
148
—
382
(355)
—
(552)
(135)
4,014

343
(170)
195
(287)
310
—
(310)
(515)
19
2,587

3,032
(1,319)
1,368
—
3,511
(3,262)—(5,076)(1,244)36,891

1,389
(113)
1,275
2,739
(34)
2,773

610
(155)
454
2,133
58
2,075

12,767(1,044)
11,722
25,169(318)
25,487

¥

¥

2020

2019

¥ 22,283
22,2836,000¥ 16,565
16,5656,000

Consolidated Statements of Comprehensive Income
Years ended March 31, 2020 and 2019

2020

2019

¥

¥

2,739
(1,242)(9)(248)(1,500)
1,239
1,273
(34)

6

2020
$

205
205
55

Thousandsof U.S. dollars(Note 2)Millions of yen

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to owners of the parent
Profit (loss) attributable to non-controlling interests$

U.S. dollars(Note 2)yen

Net income per 100 shares:
Basic
DilutedCash dividends per 100 shares

2020

2,133
(1,335)(12)(290)(1,638)
494
437
57

2020
$

25,169(11,413)(88)(2,282)(13,784)
11,384
11,704(319)

Financial Section

Consolidated Statements of Changes in Net Assets
Years ended March 31, 2020 and 2019

Millions of yen

Balance as of March 31, 2018

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Change of scope of consolidation
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2019

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Cancellation of treasury shares
Change in ownership interest of parent
due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2020

Valuationdifference on Foreign Remeasurements Noncurrency
available- translation of defined controllingfor-salebenefit plans interests
securities adjustment

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal net
assets¥ 31,186¥ 6,880 ¥ 19,830¥ (1,761)¥ 3,348¥ 18¥ (1,151)¥ 748¥ 59,100

—
—
—
—
—

—
—
—
—
—

(817)
2,075
—
—
88

—
—
(0)
10
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(817)
2,075
(0)
10
88

—

—

—

—

(1,335)

(12)

(290)

48

(1,589)¥ 31,186¥ 6,880¥21,178¥ (1,750)¥ 2,013¥5¥ (1,442)¥ 797¥ 58,867

—
—
—
—
—

—
—
—
—
—

(754)
2,773
—
—
(610)

—
—
(700)
9
610

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(754)
2,773
(700)
9
—

—

(6)

—

—

—

—

—

—

(6)

—

—

—

—

(1,241)

(9)

(248)

186

(1,313)¥ 31,186¥ 6,873¥22,587¥ (1,831)¥ 771¥ (4) ¥ (1,690)¥ 984¥ 58,876

Valuationdifference on Foreign Remeasurements Noncurrency
available- translation of defined controllingfor-salebenefit plans interests
securities adjustment

Total net
assetsThousands of U.S. dollars (Note 2)

Capitalstock
Balance as of March 31, 2019

Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Disposal of treasury shares
Cancellation of treasury shares
Change in ownership interest of parent
due to transactions with
non-controlling interests
Net changes of items other thanshareholders’ equity
Balance as of March 31, 2020

CapitalsurplusRetainedearnings

Treasuryshares$ 286,557 $ 63,223 $ 194,597 $ (16,087) $ 18,498$ 46 $ (13,250)$ 7,329 $ 540,915

—
—
—
—
—

—
—
—
—
—

(6,930)25,487——(5,607)——(6,435)
90
5,607

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

(6,930)25,487(6,435)
90
—

—

(62)

—

—

—

—

—

—

(62)

—

—

—

—

(11,411)(88)(2,282)

1,716(12,066)$ 286,557 $ 63,160 $ 207,546 $ (16,824)$ 7,086$ (42) $ (15,532)

7$ 9,046 $ 540,998

Financial Section

Consolidated Statements of Cash Flows
Years ended March 31, 2020 and 2019

Thousandsof U.S. dollars(Note 2)Millions of yen

2020

2019

2020

¥ 4,0142,401
6,102(4,636)(3,264)
(329)
143
(148)
355
(9)
49
1
653
—
—
728

¥ 2,587
2,409(3,188)
865
321
(343)
170
(195)
—
(14)
(23)
(8)
803
287
310
338

$ 36,891
22,07056,074(42,602)(29,995)(3,032)
1,319(1,368)
3,262
(91)
454
16
6,003
—
—
6,691

Sub-totalInterest and dividends income received
Interest expenses paid
Income taxes paid

6,061
337
(144)
(701)

4,320
352
(170)
(361)

55,694
3,097(1,323)(6,446)

Net cash provided by (used in) operating activities

5,552

4,141

51,021

Net cash provided by (used in) investing activities
Purchase of short-term and long-term investment securities
Proceeds from sales of short-term and long-term investment securities
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of stocks of subsidiaries and affiliates
Payments of loans receivableCollection of loans receivable
Other, net

(87)
159
(4,239)
26
(13)
—
10
192

(204)
376
(2,473)
110
—
(5)
113
164

(807)
1,468
(38,951)
242
(126)
—
99
1,766

Net cash provided by (used in) investing activities(3,951)(1,918)(36,308)

414
(33)
200
(2,111)
(754)
(11)
(700)

(1,259)(43)
36(2,117)
(816)
(9)
(0)

3,811
(307)
1,837
(19,400)(6,929)(103)(6,435)

120
(54)
160

—
—
—

1,106
(503)
1,472

(2,769)(4,211)(25,450)

Net cash provided by (used in) operating activities
Income before income taxes
Depreciation and amortization
Decrease (increase) in notes and accounts receivable-trade
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in inventories
Interest and dividends income
Interest expenses
Loss (gain) on sales of short-term and long-term investment securities
Loss (gain) on valuation of short-term and long-term investment securities
Loss (gain) on sales of property, plant and equipment and intangible assets
Loss on retirement of property, plant and equipment and intangible assets
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for retirement benefits
Loss on business restructuring
Loss on valuation of inventories
Other, net

Net cash provided by (used in) financing activities
Net increase (decrease) in short-term loans payable
Repayments of lease obligations
Proceeds from long-term loans payable
Repayment of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests
Purchase of treasury shares
Proceeds from changes in ownership interestsin subsidiaries that do not result in change in scope of consolidation
Purchase of treasury shares of subsidiaries
Proceeds from disposal of treasury shares of subsidiaries
Net cash provided by (used in) financing activities

(8)

11

(79)

(1,177)21,507—(1,976)23,134350(10,817)
197,628—¥ 20,330¥ 21,507$ 186,811

Note: Relation between the year-end balance of cash and cash equivalents and the items on the consolidated balance sheet:
Cash and deposits¥20,388(57)
Time deposits due over three months¥20,330
Cash and cash equivalents¥21,564(56)¥21,507$187,343(532)$186,811

Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and Cash Equivalents at End of Year

8

Notes to Financial Statements

Note 1. Significant Accounting Policies

securities into securities for buying & selling, stocks of their affiliates,and other securities.
Securities for buying & selling have been evaluated at market
value.
The stocks of their affiliates have been evaluated at book value.
Those other securities that have market value have been
evaluated at market value, and the unrealized profit or loss has beenreported as an independent item in Part of Capital after taxation.
Those other securities that do not have market value have been
evaluated at book value.
For the cases in which the value of those other securities withmarket value fell sharply, the relevant securities have been placed in
the balance sheet according to their market value, and the difference
between the book value and the market value has been recognized asa loss for the fiscal year. For the cases in which the net asset value of
those other securities without market value fell markedly, therelevant securities have been written down to the net asset value,
and the corresponding difference has been recognized as a loss.
Profit or loss in selling securities has been calculated based upon
the selling price by the moving average method, and included in
profit or loss.

Basis of Presenting Consolidated Financial Statements
Kurimoto, Ltd. (hereinafter referred to as “This Company”) and its
consolidated subsidiaries have presented their official accounting
records in the currency of yen and in accordance with theCommercial Code and the regulations of Securities & Exchange
Law, and in conformity with the generally accepted accounting
principles & practices of Japan (hereinafter called “Japan
Accounting Standard”).
Some part of the Japan Accounting Standard, in its method of
application and disclosure requirements, is different from theInternational Accounting Standard and some other countries’
accounting standards. Accordingly, the consolidated financial
statements attached hereto are prepared for readers who are wellacquainted with the Japan Accounting Standard.
The consolidated financial statements attached hereto have been
prepared in accordance with the Japan Accounting Standard
pursuant to the Securities & Exchange Law. Such consolidated
financial statements of This Company as were submitted to our
district’s Local Finance Bureau of the Ministry of Finance havebeen re-edited and translated into English.

Inventories
Inventories are principally stated at the cost determined by theaverage method or the specific cost method.

Consolidation Policies
These consolidated financial statements include the accounting
records of This Company and the companies over which This
Company either holds majority voting power or for which certain
other conditions verify This Company’s control over them. The
investment account of This Company in non-consolidated
subsidiaries or affiliates which are largely influenced by This
Company in their operational and financial policies have been
computed on the basis of equity-method investment balance.
The important credit & liability, trade, and unrealized profit
between and among consolidated companies have been eliminatedon a consolidation basis.

Fixed Assets (excluding lease assets)
Fixed assets are stated by book value. Method of depreciation ismainly the straight-line method by estimated useful life. Main
estimated useful lives are as follows.
Building and construction: 2 to 60 years.
Machinery and automotive equipment: 2 to 22 years.
The cost of repair or small amount reformation is expensed as
incurred, but any large scale repair or reformation is classified asassets.
Liability for Retirement Benefits
1. The Period Attribution Method for Projected Retirement
Benefits
As for the calculation of retirement benefits, the benefit formulabasis is applied for the attribution of projected retirement benefits
to the period up to the end of the fiscal year under review.
2. Mathematical Calculation for the Amortization of Actuarial
Differences
Actuarial differences are amortized by the straight-line method overa period within the average remaining service years for employees(mainly 10 years) at the time of recognition, and allocatedproportionately from the fiscal year following the respective fiscal
year of recognition.

Translation of Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies
have been translated into Japanese yen at the rate as of the date ofeach balance sheet presentation, and their exchange profit or loss
has been appropriated as their profit or loss in the current period.
The balance sheets of consolidated overseas subsidiaries aretranslated into Japanese yen at the year-end rates except forshareholders’ equity accounts, which are translated at historicalrates. Income statements of consolidated overseas subsidiaries aretranslated at the average rates during the year. Translation
adjustments resulting from translating financial statements whose
accounts are denominated in foreign currencies are not included in
the determination of net income but are reported as “Foreign
currency translation adjustments” in a component of net assets andnon-controlling interests.

Research and Development and Computer Software
Research & development expenses have been charged as incurred.
Software expenses have been included mainly in long-term
prepaid expenses and other expenses, and depreciated by astraight-line method chiefly for five-year service life.

A Range of Funds in a Statement of Consolidated Cash Flow
A fund in a statement of consolidated cash flow (cash and its
equivalent) consists of cash in hand, ordinary deposits, andshort-term investments which have a term of redemption within
three months, carry low risk for value fluctuation and can bewithdrawn easily.

Income Taxes
As to the temporary difference in the book value of assets andliabilities for the purpose of financial accounting and taxation, thenet worth method has been used to figure deferred tax assets andliabilities.

Marketable and Investment Securities
This Company & its consolidated subsidiaries have specified the
purposes of their respective securities holdings, and classified those9Notes to Financial Statements

Note 3. Short-term Bank Loans and Long-term Debt

Per Share Information
The computation of basic net income per share is based on theweighted average number of shares of common stock outstanding
during each period. The average number of shares used in thecomputation was 12,447,790 and 12,530,084 for the years ended
March 31, 2020 and 2019, respectively.

The annual average interest rates applicable to short-term bankloans at March 31, 2020 and 2019 are 0.5% and 0.4%, respectively.
Short-term bank loans and long-term debt at March 31 wascomprised of the following:

Recognition of earning cost
For construction work that was initiated this consolidated
accounting period, we will still use the percentage-of-completion
method for those ongoing projects with assured revenue by the endof the period (the cost-to-cost method will be used to estimate theprogress rate of construction), and the complete job method toother projects.

Loans from financial institution,due 2020 to 2024 withinterest rates between
0.167% and 0.48%
Sub-total
Less current portion of loans•• • • • • • • • • • • • • • • • • • • • • • • • • • ••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •Consolidated Taxation System
We have adopted a consolidated taxation system.

• • • • • • • • • • • • • • •Marketable and Investments Securities
Other marketable securities as of March 31, 2020 are as follows.

Carrying
amounts

Marketvalue

Unrealized
gain (loss)¥ 6,716¥ 7,822¥ 1,106

2020
2021
2022
2023
2024

Thousands of U.S. dollars

2020

Other securities•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2019

2020

3,081
3,081
2,375
¥ 705

4,992
4,992
2,111
¥ 2,881

28,312
28,312
21,826$ 6,486

Thousandsof U.S. dollars

Millions of yen

2020•• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •2020

The aggregate annual maturities of long-term financial debt at
March 31, 2020 and 2019 respectively are as follows:

Millions of yen

Other securities

Thousandsof U.S. dollars

Millions of yen

Carrying
amounts

Marketvalue

Unrealized
gain (loss)$ 61,712$ 71,876$ 10,163• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

2020

2019

2020

—
2,375
108
595
1
¥ 3,081

2,111
2,309
42
527
1
¥ 4,992—
21,826996
5,473
16$ 28,312

As is customary in Japan, short-term and long-term bank loans are
made under general agreements which provide that security andguarantees for future and present indebtedness will be given uponrequest of the bank, and that the bank shall have the right, as theobligations become due, or in the event of their default, to offset cash
deposits against such obligations due to the bank.

Note 2. U.S. Dollar Amounts
The dollar amounts are included solely for convenience: they should
not be construed as exact translations of current yen figures, nor are
they the dollar amounts into which yen amounts have been or could
be converted.
The approximate exchange rate of US$1=¥108.83 as of March
31, 2020, has been used for the purpose of presenting the dollar
amounts in the accompanying consolidated financial statements.

10Notes to Financial Statements

As of March 31, 2020, assets pledged as collateral for short-termbank loans, and long-term debt, including the current portion of
long-term debt, were as follows:
Millions of yen

Thousandsof U.S. dollars

2020

2020

¥ 3,206
955
771¥ 4,933$ 29,463
8,777
7,093
$ 45,333

Buildings and structures
Machinery, equipment
Land(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits including plan
applied simplified method

Note 4. Retirement Benefits
The following are matters concerning the defined benefit plan as ofMarch 31, 2020 and 2019, respectively.

Thousandsof U.S. dollars

2019

2020
Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year

¥ 12,877
683
10
83
(438)
¥ 13,216

Balance at beginning of the year
Expected return on plan assets
Actuarial gain (loss)
Benefits paid
Balance at end of the year

¥

¥

3,992
104
(679)
(72)
3,344

¥

36,681
955(6,242)(662)
30,732

Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Balance at end of the year

¥

¥

597
106
(56)
(24)
623

¥

¥

$ 126,133(33,692)
92,441

Unfunded retirement benefit obligations
Total net liability (asset) for
retirement benefits at March 31

434

408

3,993

10,494

9,482

96,434

10,494—

9,482—

96,434—¥ 10,494¥ 9,482$ 96,434

Thousandsof U.S. dollars

2020

2019

¥

¥

683
10
(104)
403

662
19
(111)
567

2020

$

6,284
94
(955)
3,706

106

122

978

¥ 1,100¥ 1,260$ 10,108

Millions of yen

Actuarial loss (gain)
Total

Thousandsof U.S. dollars

2019

2020

¥ 13,383(4,309)9,073(6) Remeasurements of defined benefit plans(before tax effect deductions)(3) Movements in net liability for retirement benefits based on thesimplified method
Millions of yen¥ 13,727(3,666)
10,0602020

4,640 $
111
(698)
(61)
3,992 $¥

Funded retirement benefit obligations
Plan assets

Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit costs calculatedby the simplified method
Total retirement benefit costs forthe fiscal year

Thousandsof U.S. dollars

2019

2020

Millions of yen(2) Movements in plan assets except plan applied simplified method
2020

2019

(5) Retirement benefit costs

2020¥ 12,310 $ 118,323
6,284
662
94
19
763
285
(4,025)(401)¥ 12,877 $ 121,440

Millions of yen

2020

Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement
benefits at end of the year

(1) Movements in retirement benefit obligations except plan applied
simplified method
Millions of yen

Thousandsof U.S. dollars

Millions of yen

586 $
122
(102)
(9)
597 $

Thousandsof U.S. dollars

2020

2019

2020

¥
¥

¥ 417
¥ 417

$ 3,299$ 3,299359359(7) Accumulated adjustments for retirement benefit(before tax effect deductions)

2020

5,490
978
(520)
(221)
5,726

Millions of yen

Unrecognized actuarial differences
Total

11

Thousandsof U.S. dollars

2020

2019

2020

¥ 2,435¥ 2,435¥ 2,076¥ 2,076$ 22,377$ 22,377

Notes to Financial Statements(8) Accumulated adjustments for retirement benefit①Plan assets comprise:

2020

Equity securities
Cash and cash equivalents
Investment trust
Other
Total

53%
3%
39%
5%
100%

Note 7. Research and Development Expenses
Research and development expenditures charged to income were
¥1,588 million ($14,598 thousand) for the year ended March 31, 2020.

2019

62%
3%
30%
5%
100%

Note 8. Income Taxes
The Company and its domestic subsidiaries are subject to several
taxes based on income, which in the aggregate resulted in statutory
tax rates of approximately 30.6% and 30.6% for the year ended
March 31, 2020 and 2019, respectively.
The effective rates of income taxes reflected in the consolidated
statements of income differed from the statutory tax rates referred
to above for the year ended March 31, 2020 due principally to
expenses not deductible for income tax purposes, and temporary
differences between the tax basis of assets and liabilities and theirreported amounts in the financial statements.
The difference between the burden rate of corporate tax after
application of tax effect accounting and the statutory tax rate is notlisted as it was recorded as a net loss for the period under review
before adjustments for taxes, etc.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets as of March 31, 2020 and 2019are presented below:②Long-term expected rate of return
Current and target asset allocations, historical and expected returns
on various categories of plan assets have been considered.
(9) Accumulated adjustments for retirement benefit
The principal actuarial assumption (expressed as weighted averages)
are as follows:
2020
Discount rateLong-term expected rate of return
Expected rate of salary increase2019

0.0%~0.5% 0.0%~0.6%
2.7%
2.5%
0.7%~5.2% 0.6%~5.1%

Defined contribution plans
The required contribution amount for consolidated subsidiaries forthe defined contribution plan was 194 million yen (1,788 thousand
US dollars) as of March 31, 2020.

Deferred tax assets
Net defined benefit liability
Accrued bonus indemnities
Allowance for doubtful accounts
Allowance for loss on construction work
Loss on revaluation of investment
securities
Amalgamated received property
Impairment loss
Operating loss carry-forwards
Elimination of inter-company profits
Other
Total gross deferred tax assets
Valuation allowance related to tax
loss carryforward
Valuation allowance related to total
deductible temporary differences
Subtotal of valuation allowance (Note 1)
Net deferred tax assets

Note 5. Contingent Liabilities
As of March 31, 2020 and 2019, the company was contingently
liable as follows:
Thousandsof U.S. dollars

Millions of yen

2019

2020
As guarantor of indebtedness of
unconsolidated subsidiaries
and others
Transfer of notes and bills endorsed
for payment

2020

¥ 53

¥ 63

$ 493

—

¥ 0

—

Thousandsof U.S. dollars

Millions of yen

Note 6. Derivatives and Hedging Activities
Some consolidated subsidiaries utilize derivatives of forward
exchange contract and interest-rate swap in order to hedge
exchange-rate fluctuation risk concerning foreign currency assets
and liabilities and hedge against interest-rate fluctuation risk
regarding securities and debts.
As they trade these with major financial institutions, we assume thatthe credit risks of these derivatives are low. The Accounting
Department implements and controls these forward exchange
contracts for our own company by way of in-house consultation anddecision.
As to the derivative trades by our consolidated subsidiaries, theirBusiness Management Department or General Affairs Department
implement and control them after their internal consultation anddecision and also notification to our company.

2020

2019

2020

¥4,556581
59
56¥ 4,242510
53
35$41,865
5,340
545
518

284
543
1
265
25
1,302
7,676

175
543
1
478
21
1,138
7,201

2,612
4,996
9
2,442
237
11,97070,539

(249)

(137)

(2,291)(1,492)(1,742)¥5,934(1,355)(1,492)¥5,708(13,717)(16,009)$54,529(Note 1)
Valuation allowance increased by 249 million yen (2,295 thousand US dollars). The primary factor of theincrease was an increase in the valuation allowance related to tax loss carryforward at consolidated
subsidiaries.

12

Notes to Financial Statements

Millions of yen

2020
Deferred tax liabilities
Evaluated difference of othersecurities
Dividends receivable
Other
Total deferred tax liabilities
Net deferred tax assets

¥

(335)
(50)
(22)
(407)
¥ 5,5262019¥ (714)
(52)
(18)
(785)
¥ 4,923

Thousandsof U.S. dollars

instruments are highly reliable Japanese financial institutions, credit
risk is judged to be immaterial.

2020

Market Risk Management
This company has entered into an exchange forward contract tohedge part of the risks arising from exchange-rate fluctuations for
operating receivables/payables denominated in foreign currencies.
With regard to floating rate debt, we closely monitor economic andinterest-rate outlooks and conduct fund raising suited to eachsituation, and employ interest-rate swap transaction in order tocontrol fluctuation risks in the interest rate for part of the debt.
As for marketable and investment securities, This Company
periodically seizes the trend of fair value and financial position of
the issuers (business partners) to continuously review the possession
situation, taking into account the market conditions and its
relationship with the business partners.
Derivative financial transactions are executed and managed bydepartments handling such transactions with approval of
authorized personnel, in accordance with the regulations specifying
transaction authority and transaction limit.
Similar management is conducted with its consolidated subsidiaries
pursuant to the regulations of This Company.

$ (3,079)
(461)
(207)
(3,748)$ 50,780

Note 9. Financial Instruments and Related Disclosures(1) Policy for Financial Instruments
This Group raises funds needed to implement financial and capital
investment plans (mainly through loans from banks). Its temporary
surpluses are mainly invested in highly liquid financial assets, while
short-term working capital is financed by loans from banks. This Group
employs derivative financial instruments for the purpose of avoiding
risks described later, and does not undertake speculative transactions.

Management of Liquidity Risk Related to Financing
Based on reports from each department, the financial department ofThis Company formulates and updates the financial plan in a timely
manner, and manages liquidity risk by way of maintaining
short-term liquidity. Financial plans of its consolidated subsidiaries
are reported to the financial department of This Company every
month in a timely manner, thereby controlling liquidity risk acrossThis Group.

(2) Nature and Extent of Risks Arising from Financial Instruments
Operating receivables, such as notes and accounts receivable-trade,
involve credit risk on the part of customers.
Foreign-currency-denominated operating receivables generated byoverseas operations, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
Marketable and investment securities, which are mainly equity
securities of affiliates, involve market fluctuation risk.
Operating payables, such as notes and accounts payable-trade, aregenerally due within five months. Part of them, denominated inforeign currencies, which could be affected by exchange-ratefluctuation risk, are hedged using forward exchange contracts as theneed arises.
The primary purpose of loans is raising funds for capital investment
and business structure reform. Of these, syndicate loans and manyother loans involve interest-rate fluctuation risk. In addition, inorder to avoid interest-rate fluctuation risk for part of the long-term
debt, we employ derivative transactions (interest-rate swap
transaction) for hedging.
Derivative transactions are exchange forward contracts aimed at
hedging exchange-rate fluctuation risk related to operatingreceivables/payables denominated in foreign currencies, andinterestrate swaps aimed at hedging interest-rate fluctuation risk
related to debt.
(3) Risk Management for Financial Instruments

Credit Risk Management
For operating receivables and long-term debt, the operations
department of respective business segment of This Company employs
credit management regulations in order to periodically monitor the
status of its major business partners, manage due dates and balances ofeach business partner, and furthermore, identify business partners
with doubtful collectability and mitigate risks arising from theirdeteriorated financial position at an early date. Similar credit
management is conducted with its consolidated subsidiaries pursuant
to the credit management regulations of This Company.
As This Company’s transaction partners on derivative financial
13Notes to Financial Statements(4) Fair Values of Financial Instruments
With regard to the fair value of financial instruments, in addition tobasing fair value on market value, the fair value of financial
instruments that have no available market value is determined byusing a rational method of calculation. However, as variables are
inherent in these value calculations, the resulting values may differ if
different assumptions are used.

Derivative financial instruments
The fair value of derivatives are based on quoted price offered by counterparty financial institutions.
However, interest-rate swaps that are accounted for under the special method are combined with thelong-term debts that are hedged by these swaps. As a result, the fair value of these interest-rate swaps isincluded in the fair value of the corresponding long-term debts.
Note 2. Financial instruments whose fair values are not readily determinable

Millionsof yenUnlisted equity securities
Investment in silent partnerships

Millions of yen

2020

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

Unrecognizedgain (loss)¥ 20,388
41,2297,822
69,43928,87020,6702,375
705¥ 52,621¥ 20,388
41,2297,822
69,43928,87020,670

¥—
—
—
—
—
—

3,081

0

¥ 52,622¥0

2019

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Fair
value

¥ 21,564
46,344
9,797
77,70632,917
20,2552,111
2,881¥ 58,165¥ 21,564
46,344
9,797
77,70632,917
20,255

¥—
—
—
—
—
—

4,993

1

¥ 58,167¥1

Unrecognizedgain (loss)

Thousands of U.S. dollars

2020

Cash and deposits
Notes and accounts receivable-trade
Investment securities
Total
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term debt
Long-term debt
Total

Carrying
amounts

Fair
value

$ 187,343
378,839
71,876
638,059
265,279
189,929
21,8266,486$ 483,521$ 187,343
378,839
71,876
638,059
265,279
189,929

$—
—
—
—
—
—

28,3175$ 483,526$ 5$ 5,404$ 118

Unlisted equity securities
These instruments are not included in investment securities as they
have no market value and their fair values are extremely difficult tomeasure.

Millions of yen
Carrying
amounts

¥ 588
¥ 12

Thousandsof U.S. dollars

Unrecognizedgain (loss)

Note 1. Method of calculating the fair value of financial instruments and matters related to marketablesecurities and derivatives
AssetsCash and deposits, and notes and accounts receivable-trade
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Investment securities
The fair values of investment securities are determined by their prices on stock exchanges.
Liabilities
Notes and accounts payable-trade, and short-term loans payable
As these instruments are settled in the short term and their fair values and book values are nearly
identical, their book values are taken to be their fair values.
Long-term debt and current portion of long-term debt
The fair value of long-term debt is determined by discounting the total amount of principal and interest
with the assumed interest rate on new loans of the same type. With respect to part of long-term debts
with floating-rate interest, special treatment of the interest-rate swap is adopted. The value of that
long-term debt is calculated from principal and interests, which is handled together with the interest-rate
swap, with interest rates reasonably estimated to be applied to similar debts.

14

Notes to Financial Statements

Note 10. Segment Information

The Machinery System Consolidated Division specializes in the
manufacture of industrial equipment (various types of powder
processing equipment and press machines, etc.), steel casting andspecial steel casting, other incidental works and various types ofplant engineering.
The Industrial Materials Consolidated Division specializes in the
manufacture of ducts, polycon FRP pipes, various types of synthetic
resin products, and other incidental works.

(1) Outline of Reportable Segments
The Company’s reportable segments are the components of ourbusiness (separate financial information for which is available), on
which periodical review is made for allocation of management
resources and appraisal of achievements by the board of directors.
Each product-based division at our headquarters compiles
comprehensive product strategies for domestic and overseas
business operations.
In other words, the Company consists of division-based reportablesegments; the Pipe System Consolidated Division, the Machinery
System Consolidated Division and the Industrial Materials
Consolidated Division.
The Pipe System Consolidated Division specializes in the
manufacture of ductile iron pipes and accessories, various types ofadjusting valves, and other incidental works.

(2) Calculation method of: sales, profits/losses, assets, liabilities
and other items for each reportable segment
The accounting procedures of the reportable segments are basicallythe same as the description in the “Important Items Concerning the
Presentation of Consolidated Financial Statements,” and any
intersegment internal revenue/transfers etc., are represented basedon actual market prices.

(3) Information on sales, profits/losses, assets, liabilities and other items for each reportable segment
Segment information for the fiscal years ended March 2019 and 2020 is as follows:
Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2020
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1
—
(479)
(479)
(290)
35,571¥ 109,904—
109,904
4,340
134,216

2,099

302

2,401

3,759

¥ 1,200¥ 54,376
245
54,622
2,338
53,690¥ 24,647
142
24,7901,020
22,293¥ 30,879
90
30,9701,272
22,660¥ 109,904
479
110,383
4,631
98,644

1,226

426

447

937

¥ 1,110¥ 1,712¥¥

Consolidated*2

¥

¥

4,960

1. The minus 290 million yen segment income adjustment includes: 21 million yen resulting from the elimination of intersegment transactions; minus 392 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as 79 million yen resulting from inventory asset adjustment.
The 35,571 million yen segment asset adjustment includes: minus 3,526 million yen resulting from the elimination of intersegment transactions; and 39,098 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 302 million yen depreciation adjustment and 1,200 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Millions of yen

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2019
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total

Adjustment*1¥ 56,228289
56,517891
55,346¥ 25,922
8
25,9301,598
21,090¥ 26,636
71
26,707738
24,512¥ 108,786
369
109,156
3,228
100,949

1,342

370

447

2,160

791

¥ 1,081

¥

¥

559

¥

2,433

—
(369)
(369)
(225)
35,520¥ 108,786—
108,786
3,003
136,469

248

2,409

¥

¥

Consolidated*2

482

¥

2,915

1. The minus 225 million yen segment income adjustment includes: 5 million yen resulting from the elimination of intersegment transactions; minus 211 million yen resulting from allocation differences of selling & generaladministrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 19 million yen resulting from inventory asset adjustment.
The 35,520 million yen segment asset adjustment includes: minus 4,394 million yen resulting from the elimination of intersegment transactions; and 39,914 million yen due to a working capital surplus, investment securities
and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 248 million yen depreciation adjustment and 482 million yen adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specific reportable segment,
and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

15

Notes to Financial Statements

Thousands of U.S. dollars

Net sales
Sales to customers
Intersegment
Total sales
Segment income
Segment assets
Other items
Depreciation
Increase in property, plant andequipment, and intangible assets

Pipe systembusiness

2020
Reportable segment
Machinery system
Industrial materials
businessbusiness

Total—(4,402)(4,402)(2,670)326,857$ 1,009,873—
1,009,873
39,882
1,233,264

19,291

2,779

22,07034,549$ 11,028$ 499,649
2,256
501,905
21,488493,342$ 226,479
1,313
227,792
9,373
204,846$ 283,744
832
284,577
11,690208,218$ 1,009,873
4,402
1,014,275
42,552906,407

11,266

3,917

4,107

8,612

$ 10,201$ 15,735$$

Consolidated*2

Adjustment*1$$

45,577

1. The minus 2,670 thousand US dollar segment income adjustment includes: minus 201 thousand US dollars resulting from the elimination of intersegment transactions; 3,603 thousand US dollars resulting from allocationdifferences of selling & general administrative expenses and experiment & research expenses to be borne by each reportable segment; as well as minus 731 thousand US dollars resulting from inventory asset adjustment.
The 326,857 thousand US dollar segment asset adjustment includes: minus 32,403 thousand US dollars resulting from the elimination of intersegment transactions; and 359,260 thousand US dollars due to a working capitalsurplus, investment securities and land, etc., which are company-wide assets and not attributable to any specific reportable segment.
The 2,779 thousand US dollar depreciation adjustment and 11,028 thousand US dollar adjustment for increases in tangible and intangible fixed assets are basic research-related assets that are not attributable to any specificreportable segment, and assets that belong to headquarters, etc.
2. Adjustment is made between segment income and Operating Income in the Consolidated Statement of Income.

Note 11. Subsequent Events(4) Geographic Segments
Geographic segment information has been omitted, as thepercentage of “national” exceeded 90% in both sales and assets in all
segments.

Cash Dividends
Cash dividends of the Company’s retained earnings for the year ended
March 31, 2020 were proposed by the Board of Directors and approvedby the shareholders at the annual general meeting held on June 25,
2020, as follows:(5) Sales to Foreign Customers
Foreign sales have been omitted, as they did not reach 10% ofconsolidated sales.

Millionsof yenCash dividends (¥30.0 per share)¥ 366

Thousandsof U.S. dollars$ 3,368

Note 12. Cancellation of treasury shares
The Company’s Board of Directors resolved at the meeting held on
November 5, 2019 to cancel treasury shares, pursuant to the provisionsof Article 178 of the Companies Act. Based on the resolution
mentioned above, 300,000 shares of common stock were cancelled on
November 19, 2019.
Millionsof yenValues of shares cancelled

16

¥ 610

Thousandsof U.S. dollars$ 5,607Independent Auditor’s Report

Independent Auditor’s Report
To the Board of Directors of Kurimoto, Ltd.

OpinionWe have audited the accompanying consolidated balance sheet of Kurimoto, Ltd. (the “Company”) and its consolidated subsidiaries asof March 31, 2020, and the related consolidated statements of income, comprehensive income, changes in net assets, and cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, allexpressed in Japanese yen.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of the Company and its consolidated subsidiaries as of March 31, 2020, and the consolidated results of their operations andtheir cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We
are independent of the Company and its consolidated subsidiaries in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management, Audit & Supervisory Board and its members for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as agoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting.
Audit & Supervisory Board and its members are responsible for overseeing the Company and its consolidated subsidiaries’ financial
reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

17Independent Auditor’s Report

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design andperform audit procedures responsive to those risks. These audit procedures are based on auditor’s professional judgment andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
• In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentationof the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate whether the presentation and notes to the consolidated financial statements are in accordance with accounting
principles generally accepted in Japan, and the overall presentation, structure, and content of the consolidated financial
statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Company and its consolidated subsidiaries to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with Audit & Supervisory Board and its members regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit & Supervisory Board and its members with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.

Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made in accordance with the basis stated in Note 1 and Note 2 to the consolidated financial statements. Such U.S. dollar
amounts are presented solely for the convenience of readers outside Japan.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
Our firm and its engagement partners do not have any interest in the Company and its consolidated subsidiaries which is required to bedisclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
PKF HIBIKI AUDIT CORPORATION
Osaka, Japan
October 30, 202018

Independent Auditor’s Report

Seiji Doko
[Representative Partner]
Engagement Partner
Certified Public Accountant
Katsuyuki Matsumoto[Representative Partner]
Engagement Partner
Certified Public Accountant
Motohiro Muto
[Representative Partner]
Engagement Partner
Certified Public Accountant

19Corporate Information

Kurimoto, Ltd.

(as of June 25, 2020)

OutlineFoundedIncorporated
Common stock
Total assets
Employees

OfficesHead Office12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone: (06) 6538-7603
Fax: (06) 6538-7758

1909
1934
¥31,186 million*¥117,126 million*
1,341*

Tokyo Office16-2, Konan 2-chome, Minato-ku, Tokyo 108-0075, Japan
Telephone: (03) 3450-8611
Fax: (03) 3450-8504*as of March 31, 2020

Board of Directors
President
Director and Senior Managing
Executive Officers
Director andManaging Executive Officers
Director andSenior Executive Officers
Outside Director
Full-Time Audit &Supervisory Board Member
Outside Audit &Supervisory Board Members
Senior Executive Officers
Executive Officers

Hokkaido Office3, Nishi 3-chome, Kitaichijo, Chuo-ku, Sapporo 060-0001, Japan
Telephone: (011) 281-3301
Fax: (011) 281-3369(as of June 25, 2020)

Moriyoshi Kushida
Hirobumi Okada

Tohoku Office12-30, 1-chome Honcho, Aoba-ku, Sendai 980-0014, Japan
Telephone: (022) 227-1872
Fax: (022) 227-8417

Mikio Yaji

Nagoya Office27-2, Meiekiminami, 1-chome, Nakamura-ku, Nagoya
450-0003, Japan
Telephone: (052) 551-6930
Fax: (052) 551-6940

Yoshiaki Shingu
Kazutaka Kikumoto
Akitoshi Oda
Nobuhiro Otsuki
Keiko Kondo
Minoru Murata

Chugoku Office
7-19, Hondori, Naka-ku, Hiroshima 730-0035, Japan
Telephone: (082) 247-4132
Fax: (082) 247-4004

Kazuhiko Hakozaki
Maki Arita
Kazuharu Kondo
Shinya Kojima
Hisato Sato
Naofumi Saito
Takehisa Fukui
Takayuki Miyazaki
Yasuharu Yoshinaga
Takao Ueda
Yasuji Noguchi
Yoshihiro Uraji
Hitoshi Marutani
Liao Jinsun

Stock

Taiyo Life Insurance Company
Japan Trustee Services Bank, Ltd.
Nippon Life Insurance Company
The Master Trust Bank of Japan, Ltd.
Resona Bank, Limited
Mizuho Bank, Ltd.

Europe Office
Address: Berliner Allee 40 40212 Dusseldorf, Germany
Telephone: +49-211-550-46411
Fax: +49-211-550-46420
Jakarta Office
Address: Sahid Sudirman Center, 56th Floor Jl. Jend. Sudirman Kav. 86,
Jakarta 10220, Indonesia
Telephone: +62-21-8063-1861
Fax: +62-21-8063-1999

Banking References(as of March 31, 2020)

Common Stock
Number of authorized shares
Number of issued shares
Number of shareholders

Principal Shareholders

Kyushu Office
3-11, Hakataeki-minami 1-chome, Hakata-ku, Fukuoka
812-0016, Japan
Telephone: (092) 451-6622
Fax: (092) 471-7696

Head OfficeMizuho Bank, Ltd. (Osaka Branch)Resona Bank, Limited (Osaka Banking Department)
Sumitomo Mitsui Banking Corporation (Midosuji Branch)
MUFG Bank, Ltd. (Osaka Main Office)39,376,600
13,098,490
6,831(as of March 31, 2020)
Number ofshares held
(in thousands)

Ratio ofshareholding

1,209
1,201
678
522
444
362

9.89%
9.83%
5.55%
4.27%
3.63%
2.96%

Tokyo OfficeMizuho Bank, Ltd. (Uchisaiwai-cho Branch)
MUFG Bank, Ltd. (Shimbashi Branch)Resona Bank, Limited (Shimbashi Branch)
Sumitomo Mitsui Banking Corporation (Hibiya Branch)

20Corporate Information

Kurimoto Group(as of June 25, 2020)

Kurimoto Group consists of Kurimoto, Ltd. and 22 subsidiaries, including the following.
Kurimoto Trading Co., Ltd.

Kurimoto Business Associates Co., Ltd.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations:

Kurimoto Logistics Corporation

Kurimoto USA, Inc.

Operations: Procurement and transport of raw materials, castiron pipes, etc.

Operations:Management and leasing of real estate, staffing
service, travel agency, insurance agency

Holding company

Readco Kurimoto, LLC
Japan Castering Co., Ltd.

Operations:

Manufacture and sales of industrial machineryOperations: Manufacture and sales of castings
Kurimoto Polymers Co., Ltd.
Yamatogawa Co., Ltd.

Operations:Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Manufacture and sales of rigid PVC pipes,
polyethylene pipes and profile extrusion products

Zentec Co., Ltd.
Motoyama Eng. Works, Ltd.

Operations:Operations: Manufacture and sales of industrial valves

Maintenance and repair work of bridges and roads
Repair and reinforcement work of concrete structures

Ks-Tech Co., Ltd.

Kurimoto Pipe Engineering Co., Ltd.

Operations: Manufacture, sales and construction of forging
machinery, forming machinery and related products

Operations:

Hokkaido Kanzai Co., Ltd.

Riko, Ltd.

Operations: Sales of ductile iron pipes, valves, and synthetic resin
products

Operations:

Design, construction and management of pipelines,
operation and maintenance of pipelines

Production of valves

Kuritetsu (Shanghai) Trading Co., Ltd.
Yashima Chemical Engineering Co., Ltd.

Operations:Operations: Design, manufacture, sales, and maintenance ofchemical and pharmaceutical equipment

Wholesale of machinery equipment, steel, andnonmetallic products

Kurimoto (Philippines) Corporation
Nihon Kaiser Co., Ltd.
Operations: Manufacture and sales of half precast products

12-19, Kitahorie 1-chome, Nishi-ku, Osaka 550-8580, Japan
Telephone (06)6538-7603
Facsimile (06)6538-7758
URL http://www.kurimoto.co.jp/english/

Operations:

Construction, installation works, electric works,
piping works, repairs and maintenance and staff
service of various kinds of plants